Tech President, April 9, 2013
Is pressure at the margins of the high-speed Internet industry in the United States finally making incumbent providers feel the heat?
Google announced Tuesday that Austin, Texas, will be the second city to get its Google Fiber service. Google first launched the service, which it says offers Internet access 100 times faster than average broadband speed at affordable prices, in Kansas City in November 2012.
Also Tuesday, AT&T released a statement announcing that it was “prepared to build an advanced fiber optic infrastructure in Austin” — provided that AT&T receive the same terms that Google does on permitting, rights of way, licenses and incentives. At Gigaom, Stacey Higginbotham rightly notesthat Google received such favorable terms during its expansion in Kansas City so various as to rival the menu at a New Jersey diner, rankling industry incumbents.
Critics of the four companies that now account for the lion’s share of broadband Internet services in this country — AT&T, Verizon, Comcast and Time Warner — are skeptical about whether AT&T’s announcement was a signal that the telecommunications giant was going to marshal serious resources to compete with Google in Austin. But AT&T still responded to the Fiber announcement — meaning, perhaps, that Google is viewed as a credible threat.
“AT&T has to make a choice because I don’t think there’s a future for AT&T in Austin unless they upgrade,” said Christopher Mitchell of the Institute for Local Self-Reliance, an advocacy group that works in support of municipally owned broadband networks and no great fan of the major telcos. “Usually when there’s a fiber-to-the-home network, the DSL market sort of dries up.”
This means that when Google launches Fiber — it plans to start serving customers gigabit-speed Internet, voice and TV by mid-2014 — its planned 7 megabit-per-second-and-totally-free offering will eat AT&T’s lunch. The only survivors in that scenario will be Google and cable Internet and TV providers.
But is AT&T serious? It says in its news release that its investment in Austin “is not expected to materially alter AT&T’s anticipated 2013 capital expenditures.”
“That suggests how serious they are. Likely a ploy for more deregulation on their part,” Mitchell said in a follow-up email.
AT&T’s very specific wording could also be a maneuver to bring the city back to the bargaining table.